The present invention relates generally to financial transactions, particularly money and value transfer transactions. More specifically, the present invention is directed to methods and systems for identifying, evaluating and reducing the exposure of a financial transaction service provider to risk arising from using representatives to conduct financial transactions, particularly risks associated with the abuse of financial transaction systems by the service provider's representatives.
Various procedures currently exist to curb the abuse of financial transaction systems by criminals, including those associated with organized crime, drug dealers, terrorist organizations and the like. “Money laundering” is the practice of engaging in specific financial transactions in order to conceal the identity, source and/or destination of money associated with illegal activities. Anti-money laundering laws in some countries (referred to herein as “AML”), such as the U.S. Bank Secrecy Act (referred to herein as “BSA”), may require financial transaction processors to monitor, investigate and report transactions of a suspicious nature to the authorities. For example, a service provider may be a money service business (“MSB”) that is required to submit a Suspicious Activity Report (“SAR”) for any cash transaction where the consumer is suspected of trying to avoid BSA reporting requirements. The service provider may be subject to potential penalties, including heavy fines and regulatory restrictions, for failing to properly file SAR's and/or otherwise comply with BSA requirements.
A service provider may enlist a third party entity (referred to herein as a “financial transaction representative” or “representative”) to accomplish money transfer transactions. As used herein, the term “representative” includes, but is not limited to, a Western Union Agent that has executed a Western Union Agency Agreement and is sometimes referred to as an “Agent”. Such representatives may be, for example, merchants, financial institutions, etc. that interact with consumers at a remote location in the transaction process. Typical transactions may include purchase or redemption of money orders, travelers checks and the like; wire transfers of money or other value; money transfers; cash advances; the loading of money or value onto smart cards and stored value cards, and the like. The service provider runs the risk that the representative may not comply with AML/BSA requirements and therefore expose the provider to penalties and/or other sanctions (referred to herein as “AML/BSA” risk).
For these and other reasons, there is a need for a financial transaction service provider to implement systems and methods for quickly and efficiently identifying and measuring the AML/BSA risk of financial transactions conducted by financial transaction representatives, and for taking the appropriate corrective action, if necessary.